Temporary Employment in Germany: Costs, Compliance and Time-to-Fill

Excerpt: 

Temporary agency work (Zeitarbeit) plays a small but strategic role in Germany’s labor market, offering companies flexible staffing for surges and skill gaps. Yet using temporary staff comes with important considerations – from cost components like hourly rates and agency fees, to strict legal compliance under the Arbeitnehmerüberlassungsgesetz (AÜG), and the potential to speed up time-to-fill for urgent roles. This article explores the latest data (2024–2025) and rules around temp employment in Germany, equipping HR and operations managers with facts to make informed staffing decisions.

Introduction: A Snapshot of Temp Work in Germany

Temporary employment agencies in Germany supply around 700,000–800,000 workers on any given day – less than 2% of the workforce¹. This share has actually declined from a peak of about 1.04 million temps (2.8%) in 2017², due in part to regulatory changes and economic shifts. Nonetheless, agency staff remain a vital tool for companies to fill positions quickly and add capacity flexibly. In a tight labor market – Germany had roughly 1.75–2 million job vacancies around 2023³ – temp agencies can help bridge the talent gap.

HR professionals often weigh cost vs. benefit when considering agency workers. While it’s easier to scale up or down with temps (you can “order” extra hands and end assignments as needed), this flexibility comes at a premium cost per hour. Moreover, Germany’s legal framework (the AÜG law) tightly regulates temporary work to protect workers’ rights and ensure fair treatment. Non-compliance can lead to hefty fines or even having the worker deemed a permanent employee of the client company⁴.

The following sections will break down key cost components of temporary staffing, the compliance requirements (licenses, contracts, equal pay, etc.), and how staffing agencies reduce time-to-hire. We’ll also look at when it makes sense to use temp staff – such as seasonal peaks or project work – and end with an FAQ addressing common questions.

The Cost Components of Temporary Employment

Hiring a temp worker in Germany involves several cost elements beyond the hourly wage. Typically, the billing rate a client pays an agency is about double the worker’s gross hourly wage⁵. Here’s what goes into those costs:

• Base Hourly Wage: This is the gross pay the temporary employee earns. It’s often determined by collective bargaining agreements (e.g. BAP/iGZ Tarifvertrag) and must meet at least the sector’s minimum wage. For example, as of late 2024 the entry-level wage for temp workers is around €14.00 per hour, rising to €14.53 by March 2025 under the union agreements⁶. Skilled positions or those with higher qualifications fall into higher pay groups (e.g. €20+ per hour in upper groups)⁷

• Social Contributions & Benefits: The agency (as the legal employer) covers employer social insurance contributions – roughly an additional ~20% on top of wages for pension, health, unemployment insurance, etc. They also provide paid vacation and sick leave as required. These statutory costs are built into the rate. The temp firm may also pay holiday/Christmas bonuses according to tenure⁸.

• Legal Uplifts (Allowances): German law and union contracts mandate extra pay for certain conditions. Examples include overtime premiums, night shift or Sunday/public holiday bonuses (often +25% to +100%), and industry-specific bonuses. In many sectors, “Branchenzuschläge” (industry surcharges) apply – i.e. incremental raises for long assignments to approach Equal Pay. By the 6th surcharge stage (15 months on one assignment), the temp’s pay reaches equivalence with regular staff⁹.

• Travel and Accommodation: If a temporary staffer must travel or stay overnight for the job, the contract may include travel cost reimbursement or per diems. For instance, companies sometimes bring in contractors from other regions for short-term projects and cover their accommodation. These expenses are typically passed through to the client or negotiated in the rate upfront. It’s important to clarify which party bears these costs to avoid surprises.

• Agency Fees and Admin: The remainder of the billing rate is the agency’s margin to cover recruiting, administration, and profit. This fee funds the agency’s services – sourcing and vetting candidates, HR administration (payroll, taxes, insurance paperwork), and the risk they assume (e.g. if a worker is absent or the client ends the contract early). Essentially, the premium you pay buys you a turnkey staffing solution without the long-term liabilities. As a rough rule, if a temp’s wage is €15/hour, an employer might pay on the order of €30/hour to the agency¹⁰. In return, the company gains flexibility: no long-term contract, and the ability to “turn off” the worker with notice per the agreement (the agency handles any layoff or reassignment).

While the hourly cost of a temp employee is higher than a direct hire, it can still be cost-effective in context. One study showed an unfilled vacancy can cost up to €38,000 in lost productivity.¹¹.

Legal Framework and Compliance: Navigating the AÜG

Germany has one of the most regulated temporary staffing environments in Europe. The Arbeitnehmerüberlassungsgesetz (AÜG), or Temporary Employment Act, sets strict rules on how agencies and client companies must operate. Here are the key legal considerations for compliance:

• Licensing Requirement: Any company that places workers at a third-party business must have an AÜG license (Erlaubnis) from the Federal Employment Agency¹². Operating without a license – or “leasing” staff under the guise of consulting or contracts – is illegal. If a firm uses an unlicensed provider, the arrangement can be deemed illicit, and the worker may be considered your direct employee by law as a penalty¹³.

• Formal Contracts (Documentation): Before a temp starts, the agency (Verleiher) and client (Entleiher) must sign an Arbeitnehmerüberlassungsvertrag – a contract explicitly stating it is a temporary agency assignment. This contract should name the individual worker and detail the assignment duration and role. The “Kennzeichnungspflicht” (designation requirement) is crucial: if you fail to label the contract as a temporary staffing arrangement or don’t name the worker, the contract is void and the worker could claim a permanent job at the client firm¹⁴.

• Maximum Assignment Duration: Since the 2017 reform, a temp employee can work at the same client for no more than 18 consecutive months in general; an interruption of >3 months resets the clock¹⁵. Some collective agreements allow extensions (in specific industries) up to 48 months via company/collective arrangements¹⁶.

• Equal Pay and Treatment: After 9 months on assignment, a temp is legally entitled to the same pay as a comparable permanent employee¹⁷. In practice, most agencies use collectively bargained pathways with Branchenzuschläge so that parity is reached by month 15 at the latest¹⁸.

• Worker Protections and Co-Determination: Temps enjoy the same fundamental labor rights as permanent staff; the AÜG also prohibits using temps to replace striking workers¹⁹. If your company has a Betriebsrat (works council), you must inform it about temp usage (term, location, duties) and present the underlying contracts²⁰.

In practice, compliance is largely the agency’s responsibility – reputable agencies will guide clients through the rules. Still, the hiring company shares liability if regulations are flouted. For example, if you knowingly keep a temp longer than allowed or engage temps without a proper contract, your company could face legal consequences. Always keep records of each temp’s assignment start and end dates, and ensure extensions or reassignments don’t cross legal limits²¹.

Speed and Flexibility: Reducing Time-to-Fill with Agencies

One of the biggest advantages of temporary staffing is the speed at which positions can be filled. In Germany’s competitive talent market, the average vacancy duration (time-to-fill) for an open job has skyrocketed – over 150 days recently (nearly 5 months on average²²). This is due to a persistent skills shortage and low unemployment: there are more job openings than job seekers in many fields²³. Every day a role sits unfilled is lost productivity – potentially thousands of euros in opportunity costs per week.

Temporary staffing agencies help companies dramatically cut down this time-to-fill for urgent or hard-to-fill roles. Here’s how:

• Existing Candidate Pool: Agencies maintain databases of pre-vetted candidates. For common roles, you might receive profiles within 1–3 working days (PASIT (Munich) — “Besetzen Sie Stellen innerhalb von 1–3 Arbeitstagen!” — https://pasit.de/personaldienstleistungen/).²⁴

• Recruitment Expertise: Good staffing firms specialize in sourcing niche skills quickly and handling background checks so candidates are “ready to go.”

• Reduced HR Burden: The worker is employed by the agency; contracts, payroll, tax forms are handled externally, so starts can happen fast.

• Trial and Conversion Option: Bring in someone temporarily, then hire if it’s a fit (“temp-to-perm”).

For HR managers, leveraging temps can turn a hiring process that normally lasts a quarter of a year into one that’s resolved in a week. The cost premium must be weighed against the cost of vacancy, which can reach tens of thousands of euros²⁵.

When to Use Temp Staffing: Practical Examples

Temporary staffing is not a silver bullet for all hiring needs, but it excels in certain scenarios: seasonal peaks, unexpected absences/backlogs, project-based work, hiring freezes/trials, and urgent skilled trades shortages. In sectors with statutory limits (e.g., construction main trade), the AÜG restricts classic temp leasing with narrow exceptions²⁶. More broadly, the Federal Employment Agency notes that flexible employment helps companies adjust quickly to order fluctuations, underscoring temp work’s role as an agility lever²⁷.

Frequently Asked Questions (FAQ)

Q: What is the maximum duration a temporary worker can be assigned to my company?

A: German law generally limits temporary agency assignments to 18 months with the same client; after an interruption of >3 months, a new 18-month cycle can start. Some collective agreements allow longer durations under specific conditions.

Q: What does “Equal Pay” mean in the context of temp employment?

A: After 9 months on assignment, a temporary agency worker must receive the same pay as a comparable permanent employee; collectively bargained Branchenzuschläge can phase parity up to 15 months.

Q: Who is the legal employer of a temporary worker – our company or the agency?

A: The agency is the legal employer (triangular relationship Verleiher–Arbeitnehmer–Entleiher); the client directs daily work but the agency handles HR/payroll.

Q: What costs does my company need to pay when using a temp?

A: Typically, a single hourly/daily billing rate to the agency that includes wages, employer social taxes, insurance, and the agency margin. Overtime/night/Sunday/holiday surcharges may be billed additionally if agreed.

Q: How fast can a temporary position be filled?

A: Often within days for common roles, thanks to pre-vetted candidate pools.

Conclusion: Flexibility with Responsibility (CTA)

Temporary staffing in Germany offers a flexible solution to handle workload spikes, staffing shortages, and the challenges of a tight labor market. By understanding the cost breakdown (wages, fees, and all) and adhering to compliance rules (AÜG licensing, contracts, duration limits, equal pay), companies can leverage temps safely and effectively. The payoff is often a much faster hiring cycle and the agility to keep operations running smoothly – whether during peak season or a surprise vacancy.

For HR and operations managers, the key is to partner with reputable, licensed agencies and to use temporary staff in the right situations. When done right, temp employment is a win-win: workers gain job opportunities and experience, while employers gain productivity on demand without long-term cost commitments.

If your organization is facing immediate staffing needs or wants to explore flexible workforce options, consider reaching out to a professional staffing firm. We’re here to help – learn more about our onboarding process or request a personalized quote to see how temporary staffing can support your business goals. Hiring the right talent quickly doesn’t have to be a struggle – with the right partner, you can fill that urgent role in no time and keep your business moving forward.

Sources:

1. Federal Employment Agency — “Entwicklungen in der Zeitarbeit” — https://statistik.arbeitsagentur.de/DE/Statischer-Content/Statistiken/Themen-im-Fokus/Zeitarbeit/generische-Publikation/Arbeitsmarkt-Deutschland-Zeitarbeit-Aktuelle-Entwicklung.pdf ↩︎
2. Institut für Sozialpolitik Aktuell — “Überlassene Leiharbeitnehmer*innen 1994–2023” — https://www.sozialpolitik-aktuell.de/files/sozialpolitik-aktuell/_Politikfelder/Arbeitsmarkt/Datensammlung/PDF-Dateien/abbIV27.pdf) ↩︎
3. Reuters — “Labour shortages ease Germany’s economy, survey shows” (19 Dec 2024) — https://www.reuters.com/markets/europe/labour-shortages-ease-germanys-economy-survey-shows-2024-12-19/) ↩︎
4. IHK Region Stuttgart — “Arbeitnehmerüberlassung” Merkblatt — https://www.ihk.de/stuttgart/fuer-unternehmen/recht-und-steuern/arbeitsrecht/reform-der-arbeitnehmerueberlassung-3677030; ↩︎
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7. DGB — “Tarifvertrag Leiharbeit: Tariftabelle” — https://www.dgb.de/politik/wirtschaft-und-transformation/mindestlohn-und-tarifpolitik/tarifrunde-leiharbeit/). ↩︎
8. DGB — “Tarifvertrag Leiharbeit: Urlaubsgeld/Weihnachtsgeld” — https://www.dgb.de/politik/wirtschaft-und-transformation/mindestlohn-und-tarifpolitik/tarifrunde-leiharbeit/) ↩︎
9. GVP — “Tarifvertrag über Branchenzuschläge (Beispiel Metall/Elektro)” — https://www.personaplan.de/informationsblaetter/downloads/2024-11-14-GVP_TV_BZ_ME.pdf; iGZ/BAP Manteltarif: Zuschläge 25%/50%/100% — e.g., Randstad PDF — https://www.randstad.de/s3fs-media/de/public/2024-04/randstad-tarifvertrag-zeitarbeit.pdf) ↩︎
10. Pactos.ai — “Verrechnungssätze in der Zeitarbeit” — https://www.pactos.ai/post/wie-werden-verrechnungssatze-in-der-zeitarbeit-angewendet) ↩︎
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12. Federal Ministry of Justice — “Act on Temporary Agency Work (AÜG) (English)” — https://www.gesetze-im-internet.de/englisch_a_g/englisch_a_g.html). ↩︎
13. Noerr — “FAQ on temporary work reforms: Part 1” — https://www.noerr.com/en/insights/faq_zur_aueg-reform_teil-1_ueberlassungshoechstdauer; Schütze & Seifert — “Info on AÜG reform” — https://www.schuetze-seifert.de/en/about-schuetze-seifert/info-on-aueg-reform) ↩︎
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15. Noerr — “FAQ Part 1: Überlassungshöchstdauer” — https://www.noerr.com/en/insights/faq_zur_aueg-reform_teil-1_ueberlassungshoechstdauer) ↩︎
16. Lexology — “Extension of the employee assignment period up to 48 months” — https://www.lexology.com/library/detail.aspx?g=910d0fb5-7e93-437a-b23c-5f89a76a8ca9). ↩︎
17. Orrick — “New Restrictions for Temporary Agency Work in Germany in 2017” — https://www.orrick.com/en/Insights/2016/10/New-Restrictions-for-Temporary-Agency-Work-in-Germany-in-2017) ↩︎
18. GVP — Branchenzuschläge https://www.personaplan.de/informationsblaetter/downloads/2024-11-14-GVP_TV_BZ_ME.pdf). ↩︎
19. Orrick — “New Restrictions … 2017” — https://www.orrick.com/en/Insights/2016/10/New-Restrictions-for-Temporary-Agency-Work-in-Germany-in-2017) ↩︎
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21. (Federal Employment Agency — “Fachliche Weisungen AÜG” — https://www.arbeitsagentur.de/datei/fw-aueg_ba026870.pdf ↩︎
22. Federal Employment Agency — “Monatsbericht April 2024: durchschnittliche Vakanzdauer 150 Tage” — https://statistik.arbeitsagentur.de/DE/Service/Statistikstatistiken/Monatsbericht.html) ↩︎
23. Reuters — “Labour shortages ease Germany’s economy, survey shows” — https://www.reuters.com/markets/europe/labour-shortages-ease-germanys-economy-survey-shows-2024-12-19/; Federal Employment Agency — “Review of 2024 (Press Release, English)” — https://www.arbeitsagentur.de/en/press/2025-02-review-of-2024-0) ↩︎
24. PASIT (Munich) — “Besetzen Sie Stellen innerhalb von 1–3 Arbeitstagen!” — https://pasit.de/personaldienstleistungen/). ↩︎
25. Personalwirtschaft — “Vakanzkosten-Rechner” — https://www.personalwirtschaft.de/hr-management/recruiting/personalbeschaffung/so-teuer-sind-unbesetzte-stellen-cov-rechner). ↩︎
26. Gesetze-im-Internet — AÜG §1b (construction sector rule) — https://www.gesetze-im-internet.de/a_g/A%C3%9CG.pdf) ↩︎
27. Federal Employment Agency — “Entwicklungen in der Zeitarbeit” — https://statistik.arbeitsagentur.de/DE/Statischer-Content/Statistiken/Themen-im-Fokus/Zeitarbeit/generische-Publikation/Arbeitsmarkt-Deutschland-Zeitarbeit-Aktuelle-Entwicklung.pdf). ↩︎